Are the best things in life really free? Basic economics says not. But surely, it’s less simple than that?
Freebies are the often-overlooked, but are remarkably an effective form of marketing that can cost far less, whilst being far more effective than traditional marketing techniques.
Sweeten the deal
Giveaways can sometimes be dismissed as the marketing strategy of small businesses with nothing to lose, but the truth is that some of the biggest players in the business world have used free giveaways to promote themselves. In what is widely accepted as the world’s first coupon, Coca Cola founder, Asa Griggs Candler began giving away coupons worth five cents for a free glass of Coca Cola in 1894. By 1895, Coca Cola was sold in all 50 US states, thanks, in part to these hand-written coupons. The Coca Cola Company is now one of the biggest companies in the world, turning over billions every year. So, before you dismiss coupons as ineffective, just remember where this household name began!
It’s actually very common for businesses to give something away for free, especially if it means securing a new customer for the long term. Not a day goes by without a mobile network or a phone shop offering a free gift when customers begin a new mobile contract. It’s common to see free smartwatches, tablets, and even games consoles and TVs thrown in to sweeten the deal.
The free gift benefits businesses two-fold. One, with a comparatively small initial spend on buying the ‘free’ item, they can secure a guaranteed income from the customer, every month for potentially the next two or three years. But two, they can also sell products that, on their own, may not be so well-selling. You’ll notice that the free gifts are hardly ever included with contracts for the latest flagship smartphone, instead, the idea is to sell cheaper models to customers that don’t need top-class tech. Though, while not as exciting, they are still great products. Perhaps a free gift could be the way to push sales of one of your lower-performing products?
What about services?
The key is to apply limits to what you give away. Offers such as the above will normally be limited to one per customer and will usually only run for a selected period of time. It simply wouldn’t be sustainable to continue giving out freebies, at a cost to your business forever. It seems obvious when the product is a physical item, but the rule still applies when you’re selling a service. Take a look at services like forex brokers: everything is digital, but the importance of reeling in repeat customers whilst maintaining a profit is just as high.
It goes without saying that many brokers will offer a bonus to anybody who makes a deposit with them, but some go a step further and offer forex no deposit bonus incentives in an effort to stand out from the crowd. It sounds risky to the business at first glance, but when you consider that a trader will have no emotional tie to their bonus, because it cost them nothing, the strategy becomes clear. Brokers are banking on the initial bonus used up, then followed by a subsequent top-up. At which point, the business has secured a paying customer.
Once again, the key is to apply limits to protect your business. Limit the bonus size, place a limit on how long the customer has to use it, and make sure that each customer can only get one free bonus. In short, keep it small, keep it short, and keep control. Otherwise, you can end up in a bad cycle of giving out freebies forever, and nobody wants to be THAT company…
A final thought
Imagine slipping up so badly that your customers could potentially get freebies from you forever. Rookie mistake, or so you’d hope. Unfortunately, one of the biggest businesses in the world has made just that error!
You may have heard of the McDonald’s survey hack, but if you haven’t the simple version is this:
- Buy anything, yes ANYTHING from McDonald’s, such as a 59p Mini McFlurry, and keep hold of your receipt.
- Fill in the survey by going to the web address and filling in the code, both of which are printed on your receipt.
- At the end of the survey, write down the five-digit code that you are given. This is a code for a £1.99 Big Mac and Fries (normally £4.59)
- Present the code, get your cheap burger, and a new receipt.
- Repeat 2-5 ad infinitum.
Ok, so McDonald’s isn’t giving its food away for FREE, per se, but they are selling it at a dramatically reduced price, simply because there’s a loophole in their terms and conditions. McDonald’s can probably afford to make this loss, but can your business? Freebies and giveaways are a great way of promoting your business and products, and gaining information about your customers – provided they are used correctly. Remember to include some robust terms and conditions before you launch a new offer.